Economy
Be More Amicable
For economic reasons US-Bangladesh relations should be as warm as possible
Certain disputes have been souring the cordial relationship between the US and Bangladesh, despite the US being an important partner both in strategic and economic issues. This may cause the economy to suffer further in the future.
The bickering started with the removal of Professor Muhammad Yunus from the post of the managing director of Grameen Bank two years ago. The US wanted Nobel Laureate Yunus to continue as the managing director of the Grameen Bank, but it was not followed by the Bangladesh government.
After the Yunus and Grameen Bank issue, the murder of Aminul Islam, a leader of Bangladesh Workers Solidarity in April last year also contributed to further straining the relationship between the two countries.
Later came the issue of signing the Trade and Investment Framework Agreement (TICFA). The US wants Bangladesh to sign the TICFA as soon as possible, but Bangladesh is still reluctant as it has not been able to reach a consensus in all the related conditions given by the US.
The US wants immediate improvement of working conditions in the factories and Bangladesh wants a gradual improvement as the country is not ready to implement such high standards in labour.
A lot of these women may lose their jobs if the government does not act fast.
The deadliest fire incident, moreover, at an Ashulia-based garment factory Tazreen Fashions, where 112 workers died on November 24 last year, put the US-Bangladesh relationship at bay. After the fire incident, the US has immediately threatened to cancel the Generalised System of Preference (GSP) for some selected products that are exported from Bangladesh to the US. Under the GSP scheme US government allows duty-waivers to some products, although the country's main apparel items are not enjoying such a facility from the US market.
Duty on export of goods to the US is a major issue for Bangladesh. Bangladesh, being a member of the least developed countries (LDCs) was supposed to enjoy duty-free facility. The US provides duty-free facility for 97 percent Bangladeshi products but a major export like apparels is not included in this package. The country's businessmen have been demanding duty-waiver on garment exports for a long time. Since apparel products have been put out of the GSP scheme, the country's garment exporters have to pay 15.30 percent duty on an average for entering into the US market and in 2011 they paid $746 million as duty to the US customs. So Bangladesh will have to negotiate with the US for resolving the duty issue as soon as possible as Bangladesh has the potential to export more garments to the US market.
In addition, the US government gives duty-waiver facility to many countries under its Generalised System of Preference (GSP), which was introduced in 1976. Bangladesh has been enjoying GSP facility to the US market from late 80s of the last century. For many countries of the world, GSP plays an important role for exporting goods to the US market.
Although this covers a very low 0.54 percent of total exports to the US, it is important for the image of the country. If the US cancels the GSP, other countries, where Bangladesh enjoys this facility, might be influenced.
After the Tazreen fire incident, a group of US senators have written letters to commerce minister for appearing at a hearing at the United States Trade Representative (USTR), the chief trade negotiating body for the US president, and has asked for a country position paper regarding labour standard within January 29, which Bangladesh has already done and is going to attend the USTR hearing March 28.
This year's USTR hearing is different from others as this time not only the American Federal Labour and Congress of Industrial Organisations (AFL-CIO) is arbitrating, but also a group of senators have threatened cancellation of the GSP facility. Generally, the USTR calls for a hearing in a gap of three years, but this time the hearing is taking place within a gap of one year because of the Tazreen fire incident. Bangladesh attended the USTR hearing in 2007 when the AFL-CIO filed a petition on the grounds of poor labour standards. The country attended the similar hearing in 2009 and another one in January 2012.
Photo: Prabir Das
Signing of Trade and Investment Framework Agreement (TICFA) is another long-pending issue between Bangladesh and the US. Failing to convince Bangladesh for signing the Trade and Investment Framework Agreement (TIFA), the US renamed it as TICFA. Bangladesh was reluctant to sign the agreement on different grounds like labour standards, intellectual property rights and security issues.
According to the US, TICFA is a platform for holding dialogues between the US and Bangladesh for resolving bilateral disputes and to develop cooperation between the two countries. Bangladesh has already finalised the draft of the TICFA deal before the arrival of immediate past US Secretary of State Hillary Rodham Clinton in May 5 last year.
The US wants better standards of working conditions and improved compliances in the factories and introduction of trade unions in the factories. But, Bangladesh is not ready now for such higher and improved standards of labour. Many US clothing brands sometimes raise the issue of labour standards in the factories when the incidents of unrest take place in the factories.
The US is also the largest investing country is Bangladesh now. The total investment of US in Bangladesh is $1.35 billion now. More importantly, US companies are drilling the gas fields in the country. There are so many US multinational companies that are in operations in Bangladesh.
Hundreds of Bangladeshi people are employed in the US multinational companies. More US investment proposals are waiting in the pipeline for investing in Bangladesh. So, we need to resolve the crisis with the US also to attract more foreign direct investment from the US.
The immediate past US Secretary of State Hillary Rodham Clinton visited Bangladesh in May last year. During her visit, Clinton discussed the TICFA issues, labour standard, Aminul Islam murder case and GSP with Prime Minister Sheikh Hasina. Later, both of the countries talked in the first US-Bangladesh partnership dialogue in Washington in September. Both the parties discussed different bilateral issues in the dialogue.
Currently, Bangladesh exports more than $5 billion to the US market, meaning a large number of employment generation in the domestic market. If the export to the US markets declines for any reasons, many garment factories will face drastic cuts in orders. This in turn will lead millions of skilled, semi-skilled and unskilled garment workers to lose their jobs.
The US is one of the largest donor countries through its USAID. The USAID will spend $900 million from 2011-16 in Bangladesh for environmental and social causes. Many US buyers are shifting orders from other countries to Bangladesh for having competitive prices of garment items.
The US is the largest foreign investing country now in Bangladesh. If the country can overcome different shortages, many US multinational companies will come here to invest in the country. Improving ties with the US is crucial for Bangladesh's economy.
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